"It was about dusk, one evening in the madness of carnival season"
"I passed down a long and winding staircase, requesting him to be cautious as he followed. We came to the foot of the descendant, and stood together upon the damp ground of the catacombs"
"in its surface were two iron staples... from one of these depended a short chain, from the other a padlock. Throwing the links about his waist, it was but the work of a few seconds to secure it"
This sets helps to set the mood by showing that is is late evening and dark out. it shows that the carnival time of year is crazy. It helps the reader understand that for this day everybody is out and drunk which makes the catacombs seem scarier because they are so alone and isolated down there.
The setting mostly takes place in the catacombs under Montresors house. The catacombs are deep underground and they are very isolated. The catacombs are very damp and cool, which doesn't help with Fortunatos cough. It is a good place for Montresor to kill Fortunato because it is unlikely that he will be found.
The main conflict in the story is Montresor killing Fortunato. He leads Fortunato deep underground and buries him alive. Montresor chooses to do this because it is the right place and the right time since no one is around and people don't really go that deep into the catacombs. He ties Fortunato up, closes the wall off, and leaves him there to die.